Budget 2021

The Chancellor used the Budget today to set out the next phase of our plan for suppressing the virus and putting our country on the road to recovery, building back better and greener from this pandemic. I know constituents across Mid Sussex will be keen to read the various announcements made in today’s Budget, which I will go through below.  

I am pleased the Government remains committed to doing whatever it takes to protect jobs and livelihoods. Over the last year, we have put in place one of the world’s most extensive economic support responses to protect jobs, businesses, and public services. As the Minister for Employment at DWP, I truly welcome the measures to support families and protect jobs across the country, as we push for recovery through the roadmap.  

Today’s Budget built on these measures, with a three-part plan:  

1.     Protecting jobs and livelihoods through the remaining months of this crisis  

2.     Strengthening public finances  

3.     Investing in our future economy   

Thanks to our vaccination roll-out, we can now see a clear path out of these restrictions and an eventual return to normality. This Budget is the foundation for our economic recovery and builds on this Government’s promises in last year’s Budget and in our 2019 manifesto. This pandemic will not prevent us from levelling-up the economy, kick-starting our Green Revolution and building back better in the months and years to come.  

Below are the finer details, and my respective thoughts, on today’s Budget: 

1.      Protecting jobs and livelihoods through the remaining months of this crisis  

•  Covid support for jobs and businesses  

  • Extending furlough until September, helping millions of people through the challenging months ahead.  

  • Expanding and extending our self-employment support schemes with two further grants, so that more people can get the support they need.  

  • £5 billion to help the high street recover, ensuring the hardest-hit businesses have the support they need through the next stage of recovery.  

  • £5 billion for new Restart Grants – a one off cash grant of up to £18,000 for hospitality, accommodation, leisure, personal care and gym businesses in England.  

  • A new UK-wide Recovery Loan Scheme to make available loans between £25,001 and £10 million, and asset and invoice finance between £1,000 and £10 million, to help businesses of all sizes through the next stage of recovery.  

  • 750,000 eligible businesses in the retail, hospitality and leisure sectors in England will benefit from business rates relief.  

  • Small and medium-sized employers in the UK will continue to be able to reclaim up to two weeks of eligible Statutory Sick Pay (SSP) costs per employee from the Government.  

  • We are extending the loss carry back rules worth up to £760,000 per company.  

• Creating job opportunities and supporting people on lower incomes  

  • Six-month extension of the £20 per week Universal Credit uplift in Great Britain  

  •  A one-off payment of £500 to eligible Working Tax Credit claimants across the UK.   

  • Extension to the VAT cut to 5% for hospitality, accommodation and attractions across the UK until the end of September, followed by a 12.5% rate for a further six months until 31 March 2022.  

  • Extension of the apprenticeship hiring incentive in England to September 2021 and an increase of payment to £3,000. 

  •  £7 million for a new “flexi-job” apprenticeship programme in England, that will enable apprentices to work with a number of employers in one sector.  

  •  Additional £126 million for 40,000 more traineeships in England, funding high quality work placements and training for 16-24 year olds in 2021/22 academic year.  

•  Housing  

  • Extending the temporary cut in Stamp Duty Land Tax in England and Northern Ireland until September will support the housing market and protect and create jobs.  

  • A new mortgage guarantee scheme will enable all UK homebuyers secure a mortgage up to £600,000 with a 5% deposit.  

•  Culture 

  •  Extension of the Film & TV Production Restart scheme in the UK, with an additional £300 million to support theatres, museums and other cultural organisations in England through the Culture Recovery Fund.  

  •  £90 million funding to support our government-sponsored national museums in England due to the financial impact of Covid-19.  

  •  £300 million for major spectator sports, supporting clubs and governing bodies in England as fans begin to return to stadia. 

•  Additional measures  

  • More than doubling the legal limit for single contactless payments, from £45 to £100  

  •  £10 million to support veterans with mental health needs across the UK.  

  •  £19 million to tackle domestic abuse in England and Wales, with funding for a network of ‘Respite Rooms’ to support homeless women and a programme to prevent reoffending.  

  • An extra £1.65 billion cash injection to ensure the Covid-19 vaccination roll-out in England continues to be a success.  

Over the course of the past year, more than 700,000 people have lost their jobs, the economy shrank by almost 10% last year and borrowing is up. Our response to Covid-19 is working and we now have a Roadmap out of these restrictions. Now it is key to continue supporting individuals and businesses who still face difficult months ahead.   

The Office for Budget Responsibility (OBR), has forecast that the economy will increase by 4% by the end of this year, and that unemployment levels have not peaked at the levels first predicted by the OBR last year (11.9%), instead stabilising this year at 6.5%. We remain committed to reducing unemployment through various Government schemes, including Kickstart, which I myself led on as Minister for Employment. The OBR concluded that the steps we have taken to protect jobs and businesses have worked, and we will continue to do so.  

This Budget is announcing an additional £65 billion support for the economy, bringing the total fiscal support overall amounts to £407 billion. This is one of the largest, comprehensive responses this country, and the world, has ever seen. We are using full fiscal firepower to protect businesses, jobs and livelihoods, while also supporting individuals across all sectors, including in the Housing market – turning ‘Generation Rent’ into ‘Generation Buy’, through the new mortgage scheme.  

2.     Strengthening public finances  

• Taxation  

  • Maintaining the income tax Personal Allowance and higher rate threshold from April 2022 until April 2026.  

  • The rate of Corporation Tax will increase to 25%, which will remain the lowest rate in the G7 - this will not take effect until 2023.  

  • Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19% and a taper above £50,000 will be introduced so that only businesses with profits greater than £250,000 will be taxed at the full 25% rate. 

  • Maintaining inheritance tax thresholds at their current levels until April 2026.  

  •  Fuel duty will be frozen for the 11th consecutive year.  

•   Other 

  •  £100 million for a new HMRC Taxpayer Protection Taskforce to crack-down on fraudsters who have exploited UK Government support schemes and those who have evaded/avoided paying taxes.   

  • Alcohol duties will be frozen across the board for the second year running saving drinkers £1.7 billion. 

  • Capping the amount of SME payable R&D tax credit that a business can receive in any one year at £20,000 (plus three times the company’s total PAYE and NICs liability).  

  • Maintaining the Lifetime Allowance at its current level of £1,073,100 until April 2026.  

  •  The adult ISA annual subscription limit for 2021-22 will remain unchanged at £20,000.  

We have had to borrow over 17% of our national income in order to combat this pandemic, and without corrective action, borrowing would continue at dangerously high levels, with debt increasing indefinitely. Thanks to the measures above, borrowing will be down to 4% next year, 2% in the year after, and continuing to fall.  

We have a responsibility to act to prevent debt and borrowing further increasing, while taking advantage of lower interest rates to invest in publicly funded projects to boost future economic growth.  

The measures outlined above will ask people and businesses who can afford to contribute to our economic recovery to do so via taxation. This is both fair and necessary.  

3.     Investing in our future economy  

• Build back better 

  •  Beginning April 2021, the new super-deduction will cut companies’ tax bill by 25p for every pound they invest in new equipment.   

  • This is worth around £25 billion to UK companies over the two-year period the super-deduction will be in full effect. 

  • Publication of the government’s ‘Build Back Better: our plan for growth’.  

•   Green Revolution  

  • This Budget is a real, material commitment to further ‘Green Growth’.  

  • The Government are creating the first ever “UK Infrastructure Bank”, to invest in public and private sector projects supporting our ‘Green Revolution’. This totals up to £40 billion in funding.  

  • £20 million to fund a UK-wide competition to develop floating offshore wind demonstrators and help support the government’s aim to generate enough electricity from offshore wind to power every home by 2030.  

  •  £68 million to fund a UK-wide competition to deliver first-of-a-kind long-duration energy storage prototypes that will reduce the cost of net zero by storing excess low carbon energy over longer periods.  

  • £4 million for a biomass feedstocks programme in the UK to identify ways to increase the production of green energy crops and forest products that can be used for energy.  

  • Plans for at least £15 billion of green gilt issuance in the coming financial year, to help finance critical projects to tackle climate change and other environmental challenges, fund important infrastructure investment, and create green jobs across the UK.  

•  Levelling up across the country  

  • Eight new English Freeports will be based in East Midlands Airport, Felixstowe & Harwich, Humber, Liverpool City Region, Plymouth, Solent, Thames and Teesside.  

  • £135 million to progress A66 Trans-Pennine upgrade.  

  • £18.8 million to transform local cultural projects in Hartlepool, Carlisle, Wakefield and Yeovil.  

  • Publication of the prospectus for the £4.8 billion UK-wide Levelling Up Fund, providing guidance for local areas on how to submit bids for the first round of funding starting in 21-22.  

• Research and Development  

  • The £375 million UK-wide ‘Future Fund: Breakthrough’ will invest in highly innovative companies such as those working in life sciences, quantum computing, or clean tech, that are aiming to raise at least £20 million of funding.  

  •  A new Help to Grow scheme to offer up to 130,000 companies across the UK a digital and management boost.  

  •  Reforms to the immigration system will help ambitious UK businesses attract the brightest and best international talent.  

• Further and local investment  

  • Launching a review of Research & Development tax reliefs to make sure the UK remains a competitive location for cutting-edge research.  

  • Over £1 billion funding for a further 45 towns in England through the Towns Fund, supporting their long-term economic and social regeneration as well as their immediate recovery from the impacts of COVID-19.  

  • £28 million to fund the Queen’s Platinum Jubilee celebrations in 2022, delivering a major celebration for the UK.  

  • £150 million Community Ownership Fund will allow communities across the UK to invest to protect the assets that matter most to them such as pubs, theatres, shops, or local sports clubs.  

  • Investing in Wales, Scotland and Northern Ireland – this is a Treasury for the whole United Kingdom.  

This Government knows we need to take steps which haven’t been taken before to ensure we not only recover in the years ahead, but thrive. I am delighted at the Chancellor’s real commitment to ‘Green Growth’ in the years and decades to come, as well as stimulating new opportunities for businesses to grow, modernise and adapt to the digital world.  

As my colleague said, we need to change the economic geography of this country – this can’t happen in one Budget, but I believe the steps outlined above are a foundation for future Budget’s to come.  

I remain confident this Government’s ambition remains unwavering to unite and lead the country, to level up, to improve education and the NHS, to reform public services and to spread prosperity across the UK – this Budget shows we are wholeheartedly committed to this. 

As my colleague, the Chancellor of the Exchequer, Rishi Sunak MP, said in the House of Commons today, this is a moment of challenge and change, and this Budget meets that challenge head on, with the promise of a brighter, better and greener future to come.  

For more details and information about today’s Budget, please visit:  

·        https://www.gov.uk/government/organisations/hm-treasury   

·        https://www.gov.uk/government/news/budget-2021-what-you-need-to-know  

·        https://www.gov.uk/government/publications/budget-2021-documents